Amkor Technology (AMKR) Q1 FY26 earnings call: guidance and Q&A

How will supply delays and pricing pressure net out against increased loadings and better mix for H2 gross margins?

Management expects gross margins to rise to mid-to-high teens in H2, driven by increased utilization, the compute segment ramp (favorable product mix), and constructive pricing environment offsetting cost increases. Material supply delays caused $50M-$100M pushout in Q1, similar expected in Q2, but utilization not impacted due to other demand.

“we expect that would cover most of those cost increases. So as we look out to the second half of the year, we're still seeing our gross margins being able to rise in that mid- to high teens level given the increase in utilization as well as the ramp expected for our compute segment surrounding the data center.”

asked by James Schneider · answered by Megan Faust

Will the computing ramp inflect in Q3 or is it more Q4 weighted?

The CPU device ramp starts in Q2, with meaningful revenue contribution in Q3, and continues to ramp beyond into 2027 and beyond.

“So it's going to continue to ramp throughout the year. I'd say the ramp, specifically for the CPE device will start this quarter, but we'll start seeing meaningful revenue contribution in the third quarter and then just continues to ramp beyond that even going into 2027 and beyond.”

asked by James Schneider · answered by Kevin Engel

Clarify the timing of the 1-2% operating income margin hit in 2027 from Arizona and how to model offsetting revenue impacts.

The 1-2% operating income margin dilution is a full-year impact for 2027, improving in 2028. Exact timing in 2027 is too early to specify. Modest revenue is expected in 2028, scaling meaningfully in 2029, with full impact from Arizona by 2030.

“So as far as the exact timing for when in 2027, that's expected to hit, it's a bit too early. Our estimates can shift based on the timing of equipment delivery as well as the speed of qualification process. So as a reminder, this impact is really following the same framework as what we experienced in Vietnam, where those costs will begin in OpEx.”

asked by Benjamin Reitzes · answered by Megan Faust

Is there a strong pipeline for CPU business (ARM/x86) beyond the current big win? How is CoWoS-L/S-Connect progressing?

Strong tailwinds for CPU business, with the current device ramping beyond 2026. Engagements with other customers are broadening for HDFO platforms (SWIFT, S-Connect), with over 5 customers. For 2.5D silicon interposer technologies, there are now over half a dozen customers. CoWoS-L (S-Connect) is still early in development, likely a 2027 discussion, but customers are motivated due to supply chain constraints.

“But if we look at our -- this HDFO platform in general, whether this is a SWIFT technology, similar to TSMC's CoWoS-R or whether it's CoWoS-L, Amkor's S-Connect technology. The customer engagements are broadening. So those platforms now we have over 5 customers that we're engaged with, different levels of qualification.”

asked by Benjamin Reitzes · answered by Kevin Engel

What are current utilization levels across mainstream/advanced sites? What is the approximate revenue power of Arizona Phase 1?

Q1 utilization was in the low 70s (vs. 50s last year), Q2 will be slight improvement in 70s. Advanced lines are highly utilized, while mainstream has lower utilization but improving (e.g., Philippines). Korea space is tight, but new facility completes end of 2026. Vietnam has headroom. Arizona Phase 1 is expected to add roughly $1 billion+ run rate revenue, which is over 10% of 2025 revenue.

“So at a high level, our Q1 utilization was in the low 70s, and if you compare that to Q1 last year, we were in the 50s, so pretty significant improvement year-on-year. When we think about Q2, we'll still be in the 70s. It will be a slight improvement, but a little bit of an increase from Q1.”

asked by Randy Abrams · answered by Kevin Engel

Is the tripling of AI advanced packaging demand- or supply-constrained? What is the updated full-year outlook for communications given Q1 strength?

Tripling of AI advanced packaging for FY26 is still on track, with opportunities to grow beyond, but could be affected by silicon/memory supply or ramp profile. Communications outlook is now low double digits for the full year (up from prior single digits), with H1 being stronger than anticipated, potentially leading to a less pronounced H2 boost than typical.

“So yes, I'd say we're still on track for tripling. I'd say the opportunities are there to grow beyond that. I'd say there are several dynamics that can affect it. Like you said, potentially silicon supply, memory supply, also just our ramp profile.”

asked by Peter Peng · answered by Kevin Engel

What is the financing mix for the $7 billion investment in Arizona?

Funding includes $400 million CHIPS grant and 35% investment tax credit (totaling $2.8 billion support). Customer contributions (some executed, some in discussion) are a second part. Amkor's own liquidity and debt capacity will also be utilized.

“So we had outlined a $7 billion investment for the 2 phases in Arizona. We have several, I would say, opportunities to help fund that. Just as a reminder, we do have government incentives in the form of chips grant funding of $400 million as well as the 35% investment tax credit. So together, that's a pretty meaningful support of $2.8 billion.”

asked by Denis Pyatchanin · answered by Megan Faust